Anticipated Sales Decrease
Samsung Electronics and LG Electronics have ambitiously released their strategic smartphone models, the Galaxy S6 and the G4, in the second quarter of this year, and now both companies have expected positive effects from the new products. However, industry watchers say that the sales of their smartphones in the second quarter will be lower than expected.
Since Apple is expected to release a new iPhone model in the second half of this year, all eyes are on domestic smartphone manufacturers whether they can change the situation of the global smartphone market competition by introducing new strategy or new products that can increase the sales.
According to securities industry sources, Samsung Electronics’ IT and mobile (IM) Division is expected to post 3.1 trillion (US$2.76 billion) to 3.4 trillion won (US$3.03 billion) in operating profit in the second quarter. The figure is up 22 percent from 2.74 trillion won (US$2.44 billion) of operating profits in the first quarter but down 24 percent from 4.421 trillion won (US$3.94 billion) in the second quarter last year.
The securities industry initially expected good performance in the second quarter due to the launch of the Galaxy S6. However, the industry has lowered a range of the improvement in sales performance as the actual sales fell short of expectations.
LG Electronics is also highly likely to see poorer results than expected in the second quarter. The industry has also lowered its forecast for LG Electronics Mobile Communications (MC) Division’s operating profits in the second quarter. This is because the sales of its strategic smartphone model G4 also fell short of earlier expectations.
Based on the current performance, Daishin Securities adjusted the Q2 profit estimates for the LG’s Mobile Communications (MC) Division from 102 million won ($90.84 million) to 56 billion won (US$49.87 million). The figure was slashed by 46 billion won (US$40.97 million). Korea Investment securities also lowered its figures from 115 billion won (US$102.41 million) to 68 billion won (US$60.56 million). The figures are lower than both 73 billion won (US$65.01 million) of operating profit in the first quarter this year and 86 billion won (US$76.59 million) in the second quarter last year. This is largely due to poor sales of the G4.
The global smartphone market is paying attention to what kind of new models Samsung Electronics and LG Electronics will release in order to increase the recent poor sales of smartphones. Samsung Electronics will launch the Galaxy Note 5 later this year.
Some industry watchers say that the Galaxy S6 Plus will hit the market first or along with the Galaxy S6.
Samsung Electronics’ Galaxy Note, which is referred to internally as “Project Noble”, is believed to have the same glass-covered metal body as the S6 series. It might be sporting an ultra-high definition 4K display for the first time in the smartphone industry.
As LG Electronics President Cho Joon-ho previously announced the launch of a premium phone, which is the upper levels of the G series, at the second half of this year, the company will unveil the new premium phone. The new model is expected to feature the best hardware specs and higher camera pixels, including Qualcomm’s Snapdragon 820 processor and 4GB of LPDDR4 RAM.